Dr. Earl R. Smith II

By Dr. Earl R. Smith II
DrSmith@Dr-Smith.com
www.Dr-Smith.com

One of the most commonly ignored conflicts in corporate governance is that between the role of the CEO and the one of Chairman of the Board of Directors. In some companies, this conflict is papered over by giving the same person both roles. This arrangement not only degrades the ability of the Board to meet its fiduciary responsibilities to the share holders – it also is an indicator that a Machiavellian culture has taken root within management and that the Board has ceded its responsibility – in direct terms, is acting negligently. Read the rest of this entry »

By Dr. Earl R. Smith II
DrSmith@Dr-Smith.com
www.Dr-Smith.com

I recently had two conversations with decidedly different people who had the same perspective on business – most notably, their businesses. When something like that occurs, I tend to stop – light up a good cigar – and settle down for a think. Most often, the results of the effort are at least therapeutic – and sometimes enlightening. Well this time the results were somewhere in the middle – sorry to you folks who were anticipating enlightenment!

Both individuals were waxing philosophical about their business and career goals. Both were about to launch into entrepreneurial efforts. One was about to found a new business while the other was running one in an early start-up phase. For what it is worth, here is a snapshot of the conversations.

“I want to run my own shop – be my own boss – be in command of my own destiny. I don’t want to report to anybody – be beholden to anybody – or controlled by anybody. As captain of my own ship, I can make the decisions – take the actions – and suffer the consequences without asking permission.”

Midget Hitlers – Naive Napoleons – Minor Machiavellis: Whenever I hear something like this, I shake my head and sigh – mostly metaphorically, of course – I try to avoid awakening the assiduously asleep whenever possible. There is no good reason to disturb the self-worshiping or misapprehending that goes into such an antisocial and repressed worldview. I say ‘good reason’ based on lots of personal experience. In earlier days, I might have donned my armor, mounted the sturdy Rocinante and set off a-tilting at windmills. However, those were younger days when I was too full of myself and confident that I could face any challenge successfully. Now, after building six businesses and helping a couple of dozen others build theirs I have come to understand that there are some swamps that are best left undrained.

Madness is, of course, a relative matter and one of interpretation – thereby doubly subjective. However, delusion is continually self-inflicted. Self-deluded people form the gods that then turn and destroy themselves – a kind of one man circular firing squad.

Let’s get to the nub of the matter. The very idea behind the comments posited by my two errant entrepreneurs – the very concepts that they rest on – are both a delusion and a snare. Like Plato’s allegory of the cave, an idealized reality that, although completely imaginary, leads to tragic misunderstandings and broken dreams – wasted lives and efforts.

No one runs their own shop – no one is their own boss – no one is control of their own destiny. Business is a collaborative team sport – the team the works most closely and effectively together regularly buries the lone riders and dysfunctional gaggles.

Ok – you got me – there is an exception if you are operating your own lemonade stand on an uninhabited island. However, you do rely on the trees for lemons and the spring for water. Ahhh well!

The common characteristic of my two ‘declarers of their own independence’ was that they were both deeply anti-social. Their view of the world was essentially egocentric – ‘me centered’ – they were absolutely determined to keep people at a distance. Both seemed to be suffering from a repressed adolescent fantasy – a kind of Never-Never Land imagining of the human race and their place in it. Of course, you can probably guess who was filling the role of Peter Pan in their fantasies. Americans seem particularly susceptible to this ‘perpetual youth until perpetual death’ fantasy.

The reason that I no longer spend much time working with these Peter Pans is that I have lost my passion for making kamikaze raids on vacant lots. Business is a team sport that requires all team members to have a strong inclination to collaborate, communicate, learn, teach, evolve and contribute. Over the years, I have helped numerous entrepreneurs build their businesses. The good ones – the successes – have come when the understanding of the ‘business of business’ is not an issue – when there is a maturity that has vanquished adolescent fantasies.

The fading memory of the tech bubble bust has diminished the appreciation of how damaging and costly these adolescent attitudes are. Today they are mostly limited to small business and start-ups that will probably go nowhere. However, there were days when Midget Hitlers, Naive Napoleons and Minor Machiavellis strode the stage – sucking up financial resources and declaring that they were going to change the world as we know it – denigrating the weakness and stupidity of their clients and potential clients (all of whom were running larger and much more successful businesses by the way) and exuding a sense of manifest destiny. Mercifully, most of these megalomaniacs are now productively employed in the fast food service industry. The path of destruction that they left – the broken lives and misdirected careers – are still with us. The hugely wasteful loss of capital still echoes.

The truth of the matter is simple to state – and just as difficult to deploy. Before you get into business in an entrepreneurial role, try to find a non-instrumental reason that people are co-habiting this world with you. Slay your own daemons before you allow them to savage the people you attempt to work lead. In other words, grow up Peter.

Related Articles:

• Assumption is the Mother of All … – Lessons for Young Wannabees
• Good Reasons Not To – Lessons for Young Wannabees
• Change Aversion – Coming to Terms
• Yes You Can
• Building Productive Relationships
• A Non-Cumulative Life

Dr. Smith is a proven senior executive, successful entrepreneur, published author and public speaker. He serves on boards of directors and advisory boards or as a strategic advisor to CEOs. Dr. Smith specializes in turnaround management, strategic planning, leadership development and executive coaching. He also works as an executive and/or life coach in the areas of personal growth and spirituality. He is the author of Amazing Pace: Turbo-charged Business Development – a book that shows how Advisory Boards can dramatically increase revenue. Dr. Smith is also the author of Dream Walk: Parables for the Living – a book of Raven Tales and exploration.

By Dr. Earl R. Smith II
DrSmith@Dr-Smith.com
www.Dr-Smith.com

Listening to the delivery of an elevator speech is the single most distracting event in an investor’s journey. It is to that point in time – the equivalent of ‘love at first sight’ – that most of the subsequent failures can be traced. An elevator speech is an advertising undertaking. It is an attempt to draw in a potential investor and get them interested in providing funding for a venture. It the starkest terms, it is a money trap. Read the rest of this entry »

By Dr. Earl R. Smith II
DrSmith@Dr-Smith.com
www.Dr-Smith.com

The reaction to my two prior articles in this series has reinforced my view that angel investors often, by their own tendencies, can make it less likely that their investments will prove profitable. In Angel’s Sins, I outlined some of the mistakes that early stage investors make. In Angel Investing – Governance I described how many investors overlook the contributions that a professional, independent board of directors can make. I have received quite a few responses from investors – some that contain tales of woe and loss while others invite me to ‘get involved’ in an effort to salvage what can be of a lost situation. I don’t much like these latter invitations – too hard on the digestion with little to show. Treating sick puppies may be necessary but this series is about preventive approaches. Read the rest of this entry »

By Dr. Earl R. Smith II
DrSmith@Dr-Smith.com
www.Dr-Smith.com

Most angel investors, when funding a start-up, ignore the structure and operation of the board of directors. Most early-stage companies that I work with have only a casually structured board that seems to exist to satisfy legal requirements. Accumulated experience has shown me that this is a very risky approach. A board has defined obligations that are important to the future of any company. Boards unable to fulfill these obligations severely limit possibilities. Here are some of the guidelines that I offer when working with these start-ups: Read the rest of this entry »

By Dr. Earl R. Smith II
DrSmith@Dr-Smith.com
www.Dr-Smith.com

In this case, I am talking about early-stage investors and the sins that they sometimes commit when they decide to back a start-up company. I spend a lot of time engaged with such companies – and much of that time is spent working to set right things that were set in place when the first round of angel funding occurred. What follows is a partial list of ‘sins’ and a few suggestions that might both mitigate their impact and improve the investors’ prospects. Read the rest of this entry »

By Dr. Earl R. Smith II
DrSmith@Dr-Smith.com
www.Dr-Smith.com

You can finish the title of this article any way you learned it. The way I learned it cannot be repeated here. The message, however, is one that every entrepreneur and start-up team needs to learn and, in my experience, almost none of them do learn. The postmortems that I have done on dead and dying start-ups show a clear pattern of mistakes and oversights which lead to the eventual demise of the company – and dissipation of the resourced and energy of the founders. At the center of most of these patters is the same mistake – made by team after team repeatedly. Read the rest of this entry »

By Dr. Earl R. Smith II
DrSmith@Dr-Smith.com
www.Dr-Smith.com

At times, I lecture to a class of undergraduates or MBA students. Mostly the courses center on entrepreneurism or some other aspect of business. A professor who is helping his students come to terms with what being in business really means generally invites me. I am able to speak from experience – having started and built six businesses – and I have learned that much of what I have learned as an entrepreneur was not well covered during my time in business school. Here are some examples of what I tell the students: Read the rest of this entry »

By Dr. Earl R. Smith II
DrSmith@Dr-Smith.com
www.Dr-Smith.com

In the first four articles in this series, I discussed the difficulties of cultivating and maintaining innovation in a corporate environment. In this article, I would like to describe two companies. They addressed the challenge of cultivating innovation from two quite different directions. The first was a case of too much innovation while the second was the more traditional case of too little. Read the rest of this entry »

By Dr. Earl R. Smith II
DrSmith@Dr-Smith.com
www.Dr-Smith.com

In the first three articles in this series, I wrote about the challenges of attempting an exit under current conditions through acquisition or merger. The combination of buyer power and uncertainty in the financing markets makes those options very dicey for sellers. In part four and this article I focus on what I see as the most viable exit strategy – a deferred exit. Read the rest of this entry »